One of the most listened to podcasts of 2019 was the Twenty Minute VC’s interview with Rahul Vohra, founder of Superhuman. At one point there was a discussion of what an entrepreneur expects a VC to bring to the table in addition to capital. The answer: leverage the VCs experience to ‘help see what's around the corner’. So in an effort to help both entrepreneurs and angel investors, Florida Funders is sharing its Top Trends for 2020 and the 20’s decade!
Top Trends for 2020
- IPO market - With the well-documented troubles of WeWork and multi-billion valuations of other unprofitable tech companies, combined with anticipated volatility in the capital markets, we expect two key things to happen (i) tech company founder compensation, structures business plans, and practices will be more scrutinized, and (ii) IPOs for tech companies to favor those companies with a strong business model, a strong board and governance practices, and showing profitability or a clear path to profitability.
- Favorable FL legislative environment - we see the Florida governor's office and legislature as a favorable legislative environment for encouraging tech companies disruption of existing business models. We have direct knowledge of certain larger tech companies actively looking at which states they should focus on expansion based upon the regulatory friendliness of the state.
- Volatility - With the lengthy decade-long bull market extending into 2020, and a heated Presidential election magnified by media and social media, we expect potential uncertainty as the November election approaches to create volatility in the capital markets. Volatility can sometimes hinder an investor’s comfort in making new investments, resulting in raising non-institutional capital potentially more difficult, especially for early-stage companies, and translating to lower valuations.
- Technology offshoots continue - as new technologies evolve, those technologies will spawn more niche-focused technologies that seek to improve some aspect of our lives. Just as Uber utilized the gig economy for improving transportation, many subsets of the gig economy, such as last-mile delivery, were spawned.
- Capital continues to flow into the Venture asset class - As interest rates remain low requiring pension funds, individuals and corporate treasuries to chase yield, capital is expected to continue to flow into the venture capital asset class which have historically been riskier investments, yielding higher returns.
Top Trends for 20's Decade
- Florida continues to grow its venture presence. Florida is the 3rd largest state in terms of population, and while Florida has hit new records of $2.89 Billion going to venture deals in 2019 ranking sixth nationally but still lags with just 2% of total VC investments. That trend will change as the world awakens to Florida’s exciting innovation, venture investing, the developing tech ecosystem with over sixty accelerators & incubators, and premier universities, three of which are ranked in the top 100 nationally for education according to US News. More available investors (population) lead to more capital being deployed, which leads to more tech startups being founded in Florida, which leads to more infrastructure, resulting in each of the three pillars feeding off of each other and attracting more and more capital, tech and infrastructure. At the same time, higher costs of living combined with higher costs for human capital are causing some startups to look into markets providing the aforementioned characteristics outside of the traditional San Francisco / Silicon Valley markets.
- Growth of specialty hubs. Just as Silicon Valley is world-renowned for its tech, certain cities will become hubs for certain infrastructure. As companies grew in Silicon Valley, exits created new wealth & experience which spawned new companies, created donations & collaborations with local universities, which spawned more talent organically and willing to relocate, all creating a spiraling growth effect. Here in Tampa, we are already starting to see this happen. Just in Cyber Security, for example, we have seen successful growth and/or exits from Connectwise, KnowBe4, A-lign, Reliaquest, Abacode, Perch, and more.
- The percentage of female & minority founders as a percentage of overall founders will continue to climb. Technology is leveling the playing field, and more than ever women and minorities are starting companies and successfully raising venture capital. There is still a long way to go towards equality, but we see continued growth in women & minority founded companies, and we are not seeing biases entering the process. More women-founded deals will be started, more women-minority funds will be raised, and new-age investors will support the viability of women-minority biased funds.
- Corporations will increase their collaboration & investment with venture funds. As large corporations grow, the opportunity cost narrows between expending resources developing innovative technologies versus acquiring proven technologies from a startup or growth-stage company to integrate and scale. We see the business connectivity between early-stage companies and mid/ large-cap corporations becoming more efficient through the increased availability of sharing information coupled with more venture capital/ private equity deals being funded.
As a bonus, here is a teaser of the top 3 exciting things Florida Funders will be unveiling to the Florida startup and investor communities in 2020:
- Candice Rezvanian - Florida Funders is very excited to have Candice Rezvanian join the team as the Director of Founder Success, working to better support our founders post-investment.
- New Impact Fund II - Florida Funders will be raising a second Impact Fund in 2020 for investment in early-stage technology companies! Details to come….
- Project ‘Angel Tsunami’ - a proprietary technology platform Florida Funders will unveil in 2020, providing Florida’s leading incubators, accelerators, universities, and angel groups an all in one platform to better connect founders and investors and manage angel investments. Details to come….